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How to Understand Mutual Funds

If you want to invest your money in mutual funds, you have to understand the mutual funds. In simple words, mutual funds are share capital but this capital is not invested by you but professional mutual fund manager. When you invest your money in mutual funds, your all money will go to fund manager.

Fund manager invests your money in different types of shares after evaluation of current and past performance of companies in different industries. Now, learn, how can you invest your money.

There are two options,

1. Investment Every Month

Like recurring deposit bank account, you have to invest a fixed amount every month, it may be Rs. 500 or Rs. 5000. This money is invested in different companies mutual funds. Every day, you can check the current value of your invested total money. Anytime, you can withdraw your money on the current price. This should long term, if you want to gain from this type of investment. Instead of trader, you should become investor, for getting long term capital gain on this investment. Benefit of this type of investment, if some companies are failing, you can gain from other companies as good smart investor.

2. Lumbsum Investment

As per this, you can invest lumb sum amount for fixed period. It is just Fixed deposit. It may be for one year or 5 year. After this, you can withdraw full or partial.

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